Correlation Between FOODWELL and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both FOODWELL and Digital Imaging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FOODWELL and Digital Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and Digital Imaging Technology, you can compare the effects of market volatilities on FOODWELL and Digital Imaging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FOODWELL with a short position of Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and Digital Imaging.
Diversification Opportunities for FOODWELL and Digital Imaging
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FOODWELL and Digital is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech and FOODWELL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FOODWELL Co are associated (or correlated) with Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of FOODWELL i.e., FOODWELL and Digital Imaging go up and down completely randomly.
Pair Corralation between FOODWELL and Digital Imaging
Assuming the 90 days trading horizon FOODWELL is expected to generate 15.02 times less return on investment than Digital Imaging. But when comparing it to its historical volatility, FOODWELL Co is 2.94 times less risky than Digital Imaging. It trades about 0.01 of its potential returns per unit of risk. Digital Imaging Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 830,837 in Digital Imaging Technology on October 29, 2024 and sell it today you would earn a total of 991,163 from holding Digital Imaging Technology or generate 119.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. Digital Imaging Technology
Performance |
| Timeline |
| FOODWELL |
| Digital Imaging Tech |
FOODWELL and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and Digital Imaging
The main advantage of trading using opposite FOODWELL and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, Digital Imaging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Digital Imaging will offset losses from the drop in Digital Imaging's long position.| FOODWELL vs. Busan Industrial Co | FOODWELL vs. Busan Ind | FOODWELL vs. RPBio Inc | FOODWELL vs. Finebesteel |
| Digital Imaging vs. KakaoBank Corp | Digital Imaging vs. Korea Information Engineering | Digital Imaging vs. Koryo Credit Information | Digital Imaging vs. Jb Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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